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John Deere Will Recognize 7% of Sales Faster Under New Policy
New revenue recognition policy could obscure end-user demand in Canada.
May 26, 2022
Deere & Company (DE), a construction and farm machinery manufacturer, has changed the terms of certain international contracts that will allow the company to recognize several billion dollars in annual sales much faster than it has previously. Historically, machinery shipped to Canadian dealers was done so on a consignment basis, meaning John Deere did not recognize revenue until dealers actually sold inventory to retail customers.

In FY22, Deere changed its dealer contracts in Canada so that revenue may be recognized the moment inventory is delivered to dealers, regardless of when it actually sells. The change is no doubt beneficial to Deeere in the short term, though it may make it slightly more difficult— at least initially— to gauge end-user demand in Canada without more thorough channel checks.

Sales in Canada were 7.28% of sales in the latest quarter ended May 1, 2022

Sales in Canada were 6.84% of sales for the year ending October 31, 2021.
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